Central Arizona Project official warns EPA proposal could cause higher taxes

The Environmental Protection Agency's proposed requirement to install a different system to reduce emissions at the coal-fired Navajo Generation Station near Lake Powell is bad policy that would cost Arizonans more to buy electricity and water and result in higher taxes, a Central Arizona Project official said at a Chandler Chamber of Commerce economic update forum Wednesday.

Pamela Pickard, CAP's board president, said substantial efforts already have been made to meet EPA standards at the power station that provides almost all of the power needed by the Central Arizona Project, which brings about 1.5 million acre-feet of Colorado River water annually to Pima, Pinal and Maricopa counties.

The water flows in a 336-mile long system of aqueducts, tunnels, pumping plants and pipelines from Lake Havasu to just south of Tucson and is the largest single resource of renewable water in the state. Because the water is ultimately delivered nearly 3,000 feet higher than where it started, this system requires a tremendous amount of power. In fact, she said, the Central Arizona Project is the largest consumer of power in the state.

She said the ability to deliver this water in an affordable way is in jeopardy if the EPA keeps pressing its current view, which she says is a fairly recent stance created by the Obama administration's attitude toward coal-fired power plants.

"We meet all of the regulations and standards," Pickard said of the Navajo plant.

The plant opened in the mid-1970s, and during the 1990s its owners invested more than $400 million in scrubbers to reduce sulfur dioxide, a gas that can cause acid rain, according to the CAP website.

And then in 2008 it began installation of Low-NOx burners to reduce emissions of smog-forming nitrogen oxide, also known as NOx. That job is nearly complete at a cost of approximately $45 million.

But the EPA is suggesting the plant needs to adopt a system called Selective Catalytic Reduction (SCR).

Pickard said this system could cost $120 million with ongoing maintenance costs of more than $1 billion. That could result in a decision to close the plant because the economics of that investment may not make sense.

She said that means the Central Arizona Project will then be competing to buy power from other suppliers in the state and the law of supply and demand will push up costs for everyone - businesses and consumers as well as the water project. That will in turn push up the price of water, she said.